City Council unanimously passed a nearly $55-million municipal budget — which includes an average tax hike of $82 for the average homeowner — and the annual $140,000 Special Improvement District (SID) budget, during its meeting Monday night, with no comments from the public and only a couple of clarifying questions from council members.
The average home in Rahway is assessed at about $133,000, which means a home assessed for $266,000 would see an increase of about $164 in the municipal portion of its tax bill for 2018.
Of the $82 average increase, City Administrator Cherron Rountree estimated that about $55, or two-thirds of it, is a result of the loss of ratables from the state’s Blue Acres program, which acquired and razed some two dozen flood-prone residential properties in Rahway. The rest of the increase, about $27, is the result of funding day-to-day operations of the city, she said. The municipal tax rate works out to $2.64 per $100 of assessed value in the 2018 spending plan, for average taxes of about $3,511.
Councilman At-Large James Baker, who’s up for re-election this year along with two other at-large seats and the mayor, asked the administration to review for the public the state cap limits on the tax levy. First Ward Councilman Rodney Farrar pointed to anticipated revenues from Payments In Lieu Of Taxes (PILOT) of more than $1.5 million this year “as a result of successful efforts to revitalize downtown.”
PILOTs are used to entice developers to invest in town, according to Chief Financial Officer Frank Ruggiero. Normally, the city receives about 40 percent of overall tax revenues, the school board gets about 40 to 45 percent, and the county gets the remaining 15 to 20 percent, he said. PILOT arrangements essentially promise to tax new developments at about 80 percent of normal taxes, however, 95 percent of the funds go directly to the city, with the remaining 5 percent to the county. “It’s a windfall for the city” and provides long-term, fixed revenue, Ruggiero told council members on Monday night.
With the exception of Meridia Lafayette Village, which has not yet provided data, all of the recent developments — about 1,000 units downtown in the past 10 to 15 years — have generated a total of seven new students to the school district, City Administrator Cherron Rountree told council members. “Lots of these projects would not happen without incentives to be developed,” she said.
PILOTs in the 2017 budget generated about $1.378 million in revenue and anticipated to be $1.5 million in 2018. Lafayette Village, the 115-unit development at the corner of Main and Monroe streets, is expected to begin its 15-year PILOT in 2018.
Four projects currently under construction also have been awarded PILOTs:
- The Gramercy — 20-year
- Main & Monroe — 30-year
- The Brownstones — 30-year
- Reva Rahway — 30-year
The municipal and SID budgets were introduced during the June 21 regular meeting. The municipal budget in its entirety can be found here. For a closer look at the SID budget, click here.